Applications for jobless benefits decreased by 26,000 in the week ended July 7 to 350,000, the fewest since March 2008, Labor Department figures showed today. Economists forecast 372,000 claims, according to the median estimate in a Bloomberg News survey. Last week’s distortion is likely to unwind slowly

over coming weeks, a Labor Department spokesman said as the data was released to the press.

Automakers including Chrysler Group LLC, Ford Motor Co. and Nissan Motor Co. are keeping more plants than normal open during this time of year to fulfill demand and replenish inventories.

For that reason, it may take time to determine if the labor market is making any REAL progress.

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“The Fed has gone about as if the problem is a shortage of liquidity. That is not the basic problem. The basic problem is uncertainty that the balance sheets of financial firms are credible.”